A budget is telling your money where to go instead of wondering where it went. (Dave Ramsey)

Budgeting is about being proactive with personal finances rather than reactive. Assuming financial responsibility and learning how to manage a household budget becomes a fairly simple task with a bit of practice. The first step is to get organized and learn a few budgeting basics.

Organizing Finances

Organizing your finances is key to successful budgeting. One of the first things to do is put all your bills in one place so that it’s easier to keep track of which bills have been paid and which are still pending. When you have a few scattered in your email, some on your kitchen table and others on a bedside table, it’s harder to keep track of where your money is being spent.

In this technological era, staying organized is made much simpler with all the available budgeting software and financial apps for your phone. With a swipe of your finger, you are that much closer to financial organization.

Technology also makes it easier for you to automate your finances, freeing up more time (and money!) to go about your daily life. Simple things like direct deposit, automatic transfers to a savings account, and automatic bill pay are all really handy in making sure your bills get paid on time and with very little effort.

Budgeting Basics

Once your finances are organized and you have a better idea of how much money is coming in and going out, you can make a budget that works for you. First, there are some budgeting decisions you’ll have to make, such as creating a spending plan that gives your money direction. These choices about where and when to spend your money will provide structure for your budget.

Once you decide where to allocate your funds, it’s time to think about what form of payment will most help you stick to your budget. Sometimes paying for items with a debit or credit card can result in overspending if you aren’t tracking spending. Another option is to pay for things with cash using The Envelope Method. In this strategy, families keep labeled envelopes for each area of expenses such as groceries, clothes, and so on. Each envelope contains the corresponding amount of cash that your budget indicates for a set period of time. This method helps spenders physically keep track of how much they have left to spend to stay within budget and indulge in guilt-free spending.

If you want to avoid living paycheck-to-paycheck, budgeting is essential. Check out these other tips to help you win at budgeting.

Seasonal Expenses

In addition to weekly expenses such as groceries and utilities, it’s important to make room in your budget for seasonal expenses. Summer and winter can be two seasons in which we spend more money than usual. If you have children, summertime budgeting needs might include daycare expenses or putting aside money to go on a family vacation. In the fall, there are back-to-school expenses to be accounted for. The holidays can also make budgeting a bit trickier, but not impossible.

(Check out our holiday shopping planner to help stick to your budget during the holidays.)

Savings

Ultimately, the goal of budgeting is to manage your expenses and work towards putting money aside into savings for future use. For example, it’s never too early to start budgeting for retirement. Setting money aside into an emergency fund for unexpected expenses can also help ease the financial burden for unanticipated medical bills or car repairs.

Simple Monthly Budgeting Worksheet

If you decide that it’s time to create your own personalized budget, Sunset Finance can help. We’ve created a couple Monthly Budgeting Worksheets to help you categorize your spending and keep you on track. Download it today to get started.